Polik company makes and sells a single product called Ret. Operating at full capacity will give 30000 units per year. Costs associated at this 30000 level of production are as follows: Direct material $450000 Direct labor $240000 Variable overhead $90000 Fixed overhead $270000 Variable selling $120000 Fixed selling $180000 Total $1350000 The Rets are normally sold for a price of $50 per unit. Fixed overhead of $270000 is for a range of 25000 to 30000 units per year. QUESTIONS 1. Assume that due to slow economy, the company can sell only 25000 units through normal channels next year. A large retain chain has offered to purchase 5000 units if Polik would give 16% discount on the selling price. There would be no sales commission on this order and so the variable selling expenses for this order will be lower by 75%. However, Polik would have to get a special machine costing $10,000 to do this order. a. What will be the impact on companys income if this order is accepted? b. Should the company accept or reject? I think that the answer is that there is a net profit increase of 65,000. Can anyone please tell me if this is right or if I miscalculated.